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TAG Oil Ltd. has announced the Company achieved record operating revenue of $16.2 million for the second quarter ending September 30, 2014, up from $15.5 million in the first quarter, in combination with consistent production growth averaging 1,845 barrels of oil equivalent per day (78% oil) during Q2 operations and 1,990 (76% oil), boe/d in October 2014.
Based on the growing oil production trends from its Taranaki Basin operations, TAG is pursuing a number of alternatives with a view to materially grow the Company's high netback oil production. These include continued low-risk development drilling, low-cost optimization of bypassed oil pay, and acceleration of development and step out drilling in core discovery areas. At the same time, TAG will minimize risk and working capital spent on non-producing assets and seek alternative methods for funding high-risk, high-reward drilling.
TAG CEO Garth Johnson commented: "I am pleased that TAG continues to achieve excellent results, steady oil production growth and organic value creation for our shareholders. We have now recorded four consecutive quarters of increased revenues, generating net income of $5.1 million during the quarter and $8.8 million for the six months to date.
We are proud of these achievements and look forward to leveraging TAG's strong corporate and dominant operational position in New Zealand . New Zealand is the perfect backdrop for us to grow – where the Company can enjoy the benefits of a high-impact international portfolio without the political risk in other underexplored regions of the world."
September 30, 2014 Highlights
- Revenue for the first six months was $31.8 million from $30.6 million over the same period last year.
- Operating netback increased by 28% for the first six months to $69.25 per boe from $54.14 per boe over the same period last year due to increasing oil production.
- Cashflow provided from operating activities increased by 6% for the first six months of fiscal year 2015 to $15.0 million from $14.2 million over the same period last year.
- Net income before taxes increased by 49% for the first six months of fiscal year 2015 to $8.8 million from $5.9 million over the same period last year.
- TAG retained $40.9 million in cash and cash equivalents, and $45.8 million in working capital.
- Average net daily production increased for the quarter ended September 30, 2014 to 1,845 boe/d (78% oil) from 1,750 boe/d (74% oil) for the quarter ended June 30, 2014 , and 1,486 boe/d (72% oil) for the quarter ended March 31, 2014 .
- Record net oil production volumes achieved, averaging 1,437 bbl/d (+408 boe of gas) for the quarter.
- TAG advanced and/or completed a number of projects in the quarter that incurred capital expenditures of $11.1 million , compared to $11.4 million in Q1 and $14.5 million for the same quarter last year.
Operations Update and Outlook for Fiscal Year 2015
As announced in May 2014 , TAG's capital budget for fiscal year 2015 was $60 million; funded by forecasted cash flow of $40 million for the year and working capital on hand.
The Company has amended the capital budget to reduce spending to $43 million for the 2015 fiscal by extending the timing of certain higher risk work commitments to fiscal year 2016/17 in order to maintain a strong balance sheet while continuing to build production as previously guided.